##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1937
 For the transition period from  to
 Commission File No. 001-16101
 BANCORP RHODE ISLAND, INC.
  Rhode Island
    
    05-0509802(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification No.)
 ONE TURKS HEAD PLACE, PROVIDENCE, RI 02903
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
  Common Stock  Par Value $0.01
    
    4,694,741 shares(class)
    
    (outstanding)




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##### 



BANCORP RHODE ISLAND, INC.
Quarterly Report on Form 10-Q
Table of Contents
 Description
    
    Page NumberCover Page
    
    
    1Table of Contents
    
    
    2Part I  Financial InformationItem 1. Financial Statements (unaudited)Consolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Changes in Shareholders Equity
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Condensed Notes to Consolidated Financial Statements
    
    
    7-27Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    28-44Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    45Item 4. Controls and Procedures
    
    
    46Part II  Other InformationItem 1. Legal Proceedings
    
    
    47Item 1A. Risk Factors
    
    
    47-48Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    49Item 3. Defaults Upon Senior Securities
    
    
    49Item 5. Other Information
    
    
    49Item 6. Exhibits
    
    
    50Signature Page
    
    
    51Exhibit 10.6(c)Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  Special Note Regarding Forward Looking Statements
    2




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Balance Sheets


(unaudited)
 March 31,
    
    
    December 31,2011
    
    
    2010(In thousands)ASSETS:Cash and due from banks
    
    $
    16,573
    
    
    $
    14,384Overnight investments
    
    
    551
    
    
    
    395Total cash and cash equivalents
    
    
    17,124
    
    
    
    14,779Available for sale securities (amortized cost of $359,299 and
$357,402, respectively)
    
    
    361,579
    
    
    
    360,025Stock in Federal Home Loan Bank of Boston
    
    
    16,274
    
    
    
    16,274Loans and leases receivable:Commercial loans and leases
    
    
    783,696
    
    
    
    780,264Residential mortgage loans
    
    
    160,658
    
    
    
    164,877Consumer and other loans
    
    
    210,094
    
    
    
    210,348Total loans and leases receivable
    
    
    1,154,448
    
    
    
    1,155,489Allowance for loan and lease losses
    
    
    (18,222
    )
    
    
    (18,654
    )Net loans and leases receivable
    
    
    1,136,226
    
    
    
    1,136,835Premises and equipment, net
    
    
    11,677
    
    
    
    11,889Goodwill, net
    
    
    12,262
    
    
    
    12,262Accrued interest receivable
    
    
    4,411
    
    
    
    4,842Investment in bank-owned life insurance
    
    
    31,580
    
    
    
    31,277Prepaid expenses and other assets
    
    
    15,375
    
    
    
    15,576Total assets
    
    $
    1,606,508
    
    
    $
    1,603,759LIABILITIES:Deposits:Demand deposit accounts
    
    $
    254,291
    
    
    $
    264,274NOW accounts
    
    
    65,127
    
    
    
    70,327Money market accounts
    
    
    113,126
    
    
    
    96,285Savings accounts
    
    
    343,286
    
    
    
    341,667Certificate of deposit accounts
    
    
    325,831
    
    
    
    347,613Total deposits
    
    
    1,101,661
    
    
    
    1,120,166Overnight and short-term borrowings
    
    
    36,068
    
    
    
    40,997Wholesale repurchase agreements
    
    
    19,801
    
    
    
    20,000Federal Home Loan Bank of Boston borrowings
    
    
    273,582
    
    
    
    260,889Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    13,403Other liabilities
    
    
    31,801
    
    
    
    19,626Total liabilities
    
    
    1,476,316
    
    
    
    1,475,081SHAREHOLDERS EQUITY:Common stock, par value $0.01 per share, authorized 11,000,000 shares:Issued: 5,074,192 and 5,047,942 shares, respectively
    
    
    50
    
    
    
    50Additional paid-in capital
    
    
    74,556
    
    
    
    73,866Treasury stock, at cost: 385,950 and 373,850 shares, respectively
    
    
    (12,897
    )
    
    
    (12,527
    )Retained earnings
    
    
    67,001
    
    
    
    65,584Accumulated other comprehensive income, net
    
    
    1,482
    
    
    
    1,705Total shareholders equity
    
    
    130,192
    
    
    
    128,678Total liabilities and shareholders equity
    
    $
    1,606,508
    
    
    $
    1,603,759
 See accompanying notes to unaudited consolidated financial statements
  3




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Operations


(unaudited)
 Three Months EndedMarch 31,2011
    
    
    2010(In thousands, except per share data)Interest and dividend income:Overnight investments
    
    $
    
    
    
    $
    5Mortgage-backed securities
    
    
    2,625
    
    
    
    3,229Investment securities
    
    
    397
    
    
    
    550Federal Home Loan Bank of Boston stock dividends
    
    
    12
    
    
    
    Loans and leases
    
    
    14,550
    
    
    
    14,568Total interest and dividend income
    
    
    17,584
    
    
    
    18,352Interest expense:Deposits
    
    
    1,459
    
    
    
    2,278Overnight and short-term borrowings
    
    
    10
    
    
    
    18Wholesale repurchase agreements
    
    
    139
    
    
    
    139Federal Home Loan Bank of Boston borrowings
    
    
    2,296
    
    
    
    2,665Subordinated deferrable interest debentures
    
    
    165
    
    
    
    164Total interest expense
    
    
    4,069
    
    
    
    5,264Net interest income
    
    
    13,515
    
    
    
    13,088Provision for loan and lease losses
    
    
    1,125
    
    
    
    1,600Net interest income after provision for loan and lease losses
    
    
    12,390
    
    
    
    11,488Noninterest income:Total other-than-temporary impairment losses on
available for sale securities
    
    
    
    
    
    
    (1,592
    )Non-credit component of other-than-temporary losses
recognized in other comprehensive income
    
    
    
    
    
    
    1,021Credit component of other-than-temporary impairment
losses on available for sale securities
    
    
    
    
    
    
    (571
    )Service charges on deposit accounts
    
    
    1,140
    
    
    
    1,264Income from bank-owned life insurance
    
    
    303
    
    
    
    315Loan related fees
    
    
    220
    
    
    
    189Gain on sale of available for sale securities
    
    
    212
    
    
    
    475Commissions on nondeposit investment products
    
    
    194
    
    
    
    237Net (loss) gain on lease sales and commissions on loans
originated for others
    
    
    (4
    )
    
    
    36Other income
    
    
    267
    
    
    
    370Total noninterest income
    
    
    2,332
    
    
    
    2,315Noninterest expense:Salaries and employee benefits
    
    
    5,934
    
    
    
    5,843Occupancy
    
    
    907
    
    
    
    861Data processing
    
    
    681
    
    
    
    654Professional services
    
    
    606
    
    
    
    632FDIC insurance
    
    
    477
    
    
    
    475Operating
    
    
    454
    
    
    
    462Marketing
    
    
    353
    
    
    
    258Equipment
    
    
    276
    
    
    
    255Loan workout and other real estate owned
    
    
    206
    
    
    
    336Loan servicing
    
    
    144
    
    
    
    176Other expenses
    
    
    1,231
    
    
    
    536Total noninterest expense
    
    
    11,269
    
    
    
    10,488Income before income taxes
    
    
    3,453
    
    
    
    3,315Income tax expense
    
    
    1,146
    
    
    
    1,096Net income
    
    $
    2,307
    
    
    $
    2,219Per share data:Basic earnings per common share
    
    $
    0.49
    
    
    $
    0.48Diluted earnings per common share
    
    $
    0.49
    
    
    $
    0.48Cash dividends declared per common share
    
    $
    0.19
    
    
    $
    0.17Weighted average common shares outstanding  basic
    
    
    4,683
    
    
    
    4,622Weighted average common shares outstanding  diluted
    
    
    4,715
    
    
    
    4,650
 See accompanying notes to unaudited consolidated financial statements
  4




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BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Changes in Shareholders Equity


(unaudited)
 AccumulatedOtherAdditional
    
    
    
    
    
    
    
    
    
    
    Compre-Common
    
    
    Paid-in
    
    
    Treasury
    
    
    Retained
    
    
    hensiveThree months ended March 31,
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Total(In thousands, expect per share data)2010Balance at December 31, 2009
    
    $
    50
    
    
    $
    72,783
    
    
    $
    (12,309
    )
    
    $
    59,012
    
    
    $
    1,125
    
    
    $
    120,661Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,219
    
    
    
    
    
    
    
    2,219Other comprehensive income:Unrealized holding gains on
securities available for sale,
net of taxes of ($1,213)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,252
    
    
    
    2,252Reclassification adjustment for
net gains included in net
income, net of taxes of $166
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (309
    )
    
    
    (309
    )Non-credit portion OTTI, net of
taxes of $358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (663
    )
    
    
    (663
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,499Exercise of stock options
    
    
    
    
    
    
    220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220Macrolease acquisition
    
    
    
    
    
    
    211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211Share repurchases
    
    
    
    
    
    
    
    
    
    
    (218
    )
    
    
    
    
    
    
    
    
    
    
    (218
    )Share-based compensation
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92Dividends on common stock ($0.17
per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (786
    )
    
    
    
    
    
    
    (786
    )Balance at March 31, 2010
    
    $
    50
    
    
    $
    73,306
    
    
    $
    (12,527
    )
    
    $
    60,445
    
    
    $
    2,405
    
    
    $
    123,6792011Balance at December 31, 2010
    
    $
    50
    
    
    $
    73,866
    
    
    $
    (12,527
    )
    
    $
    65,584
    
    
    $
    1,705
    
    
    $
    128,678Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,307
    
    
    
    
    
    
    
    2,307Other comprehensive income:Unrealized holding gains on
securities available for
sale, net of taxes of $46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (85
    )
    
    
    (85
    )Reclassification adjustment for
net gains included in net
income, net of taxes of $74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (138
    )
    
    
    (138
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,084Exercise of stock options
    
    
    
    
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    397Share repurchases
    
    
    
    
    
    
    
    
    
    
    (370
    )
    
    
    
    
    
    
    
    
    
    
    (370
    )Share-based compensation
    
    
    
    
    
    
    153
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153Tax benefit from exercise of stock
options
    
    
    
    
    
    
    140
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    140Dividends on common stock ($0.19
per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (890
    )
    
    
    
    
    
    
    (890
    )Balance at March 31, 2011
    
    $
    50
    
    
    $
    74,556
    
    
    $
    (12,897
    )
    
    $
    67,001
    
    
    $
    1,482
    
    
    $
    130,192
 See accompanying notes to unaudited consolidated financial statements
  5




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Cash Flows

 (unaudited)
 Three Months EndedMarch  31,2011
    
    
    2010(In thousands)Cash flows from operating activities:Net income
    
    $
    2,307
    
    
    $
    2,219Adjustments to reconcile net income to net cash provided by (used in) operating
activities:Depreciation, amortization and accretion, net
    
    
    (276
    )
    
    
    (1,444
    )Provision for loan and lease losses
    
    
    1,125
    
    
    
    1,600Income from bank-owned life insurance
    
    
    (303
    )
    
    
    (315
    )Share-based compensation expense
    
    
    153
    
    
    
    92Net loss (gain) on lease sales
    
    
    14
    
    
    
    (17
    )Gain on sale of available for sale securities
    
    
    (212
    )
    
    
    (475
    )Credit component of other-than-temporary impairment
losses on available for sale securities
    
    
    
    
    
    
    571Loss on sale of other real estate owned
    
    
    
    
    
    
    56Proceeds from sales of leases
    
    
    5
    
    
    
    907Leases originated for sale
    
    
    (19
    )
    
    
    (890
    )Decrease in accrued interest receivable
    
    
    431
    
    
    
    101Decrease in prepaid expenses and other assets
    
    
    766
    
    
    
    146Decrease in other liabilities
    
    
    (2,879
    )
    
    
    (5,372
    )Net cash provided by (used in) operating activities
    
    
    1,112
    
    
    
    (2,821
    )Cash flows from investing activities:Available for sale securities:Purchases
    
    
    (30,085
    )
    
    
    (31,313
    )Maturities and principal repayments
    
    
    39,128
    
    
    
    41,081Proceeds from sales
    
    
    4,176
    
    
    
    3,311Net increase in loans and leases
    
    
    (180
    )
    
    
    (12,368
    )Capital expenditures for premises and equipment
    
    
    (143
    )
    
    
    (210
    )Proceeds from sale of other real estate owned
    
    
    
    
    
    
    345Net cash provided by investing activities
    
    
    12,896
    
    
    
    846Cash flows from financing activities:Net (decrease) increase in deposits
    
    
    (18,505
    )
    
    
    8,787Net decrease in overnight and short-term borrowings
    
    
    (5,128
    )
    
    
    (2,320
    )Proceeds from long-term borrowings
    
    
    89,500
    
    
    
    33,700Repayment of long-term borrowings
    
    
    (76,807
    )
    
    
    (40,793
    )Exercise of stock options
    
    
    27
    
    
    
    2Tax benefit from exercise of stock options
    
    
    140
    
    
    
    Dividends on common stock
    
    
    (890
    )
    
    
    (786
    )Net cash used in financing activities
    
    
    (11,663
    )
    
    
    (1,410
    )Net increase (decrease) in cash and cash equivalents
    
    
    2,345
    
    
    
    (3,385
    )Cash and cash equivalents at beginning of period
    
    
    14,779
    
    
    
    20,830Cash and cash equivalents at end of period
    
    $
    17,124
    
    
    $
    17,445Supplementary Disclosures:Cash paid for interest
    
    $
    4,441
    
    
    $
    5,749Cash paid for income taxes
    
    
    519
    
    
    
    43Non-cash investing and financing transactions:Change in accumulated other comprehensive income, net of taxes
    
    
    (223
    )
    
    
    1,943Goodwill increase related to Macrolease acquisition
    
    
    
    
    
    
    23Treasury stock acquisitions from shares tendered in stock option exercises
    
    
    370
    
    
    
    218Transfer of loans to other real estate owned
    
    
    445
    
    
    
    724Non-credit component of other-than-temporary impairment, net of taxes
    
    
    
    
    
    
    663(Purchase) sale of available for sale securities not yet settled
    
    
    (15,054
    )
    
    
    5,467
 See accompanying notes to unaudited consolidated financial statements
  6




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Notes to Consolidated Financial Statements (unaudited)
 (1) Basis of Presentation
       (2) Earnings per Share
   7




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##### Table of Contents



Three Months EndedMarch 31,
    
    
    March 31,2011
    
    
    2010(In thousands, except per share data)Basic EPS Computation:Numerator:Net income
    
    $
    2,307
    
    
    $
    2,219Denominator:Weighted average shares outstanding
    
    
    4,683
    
    
    
    4,622Basic EPS
    
    $
    0.49
    
    
    $
    0.48Diluted EPS Computation:Numerator:Net income
    
    $
    2,307
    
    
    $
    2,219Denominator:Weighted average shares outstanding
    
    
    4,683
    
    
    
    4,622Dilutive effect of stock options
    
    
    31
    
    
    
    28Dilutive effect of contingent shares
    
    
    1
    
    
    
    Diluted weighted average shares outstanding
    
    
    4,715
    
    
    
    4,650Diluted EPS
    
    $
    0.49
    
    
    $
    0.48
  (3) Recently Adopted Accounting Pronouncements
 Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Instruments
 Receivables (Topic 310): Disclosures
About the Credit Quality of Financing Receivables and the Allowance for Credit Losses Receivables, Note 6 Credit Quality of Loans and Leases and Allowance
for Loans and Leases.
  8




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##### Table of Contents



Receivables (Topic 310): Deferral of the
Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. Note 4  Recently Issued Accounting Pronouncements
 (4) Recently Issued Accounting Pronouncements
 Receivables (Topic 310): A Creditors
Determination of Whether a Restructuring is a Troubled Debt Restructuring.
 (5) Available for Sale Securities
   Amortized
    
    
    Unrealized
    
    
    UnrealizedCost (1)
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In thousands)At March 31, 2011:GSE obligations
    
    $
    80,984
    
    
    $
    332
    
    
    $
    (397
    )
    
    $
    80,919Trust preferred CDOs
    
    
    1,518
    
    
    
    
    
    
    
    (917
    )
    
    
    601Collateralized mortgage obligations
    
    
    24,595
    
    
    
    419
    
    
    
    (136
    )
    
    
    24,878GSE mortgage-backed securities
    
    
    252,202
    
    
    
    5,227
    
    
    
    (2,248
    )
    
    
    255,181Total
    
    $
    359,299
    
    
    $
    5,978
    
    
    $
    (3,698
    )
    
    $
    361,579At December 31, 2010:GSE obligations
    
    $
    80,992
    
    
    $
    436
    
    
    $
    (394
    )
    
    $
    81,034Trust preferred CDOs
    
    
    1,518
    
    
    
    
    
    
    
    (956
    )
    
    
    562Collateralized mortgage obligations
    
    
    28,885
    
    
    
    517
    
    
    
    (1,234
    )
    
    
    28,168GSE mortgage-backed securities
    
    
    246,007
    
    
    
    6,076
    
    
    
    (1,822
    )
    
    
    250,261Total
    
    $
    357,402
    
    
    $
    7,029
    
    
    $
    (4,406
    )
    
    $
    360,025
 (1)
    
    Amortized cost is net of write-downs as a result of other-than-temporary
impairment.  9




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##### Table of Contents



Number
    
    
    Less than One Year
    
    
    One Year or Longer
    
    
    Totalof
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedHoldings
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(Dollars in thousands)At March 31, 2011:GSE obligations
    
    
    7
    
    
    $
    34,597
    
    
    $
    (397
    )
    
    $
    
    
    
    $
    
    
    
    $
    34,597
    
    
    $
    (397
    )Trust preferred CDOs
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    601
    
    
    
    (917
    )
    
    
    601
    
    
    
    (917
    )Collateralized mortgage
obligations
    
    
    2
    
    
    
    213
    
    
    
    
    
    
    
    6,436
    
    
    
    (136
    )
    
    
    6,649
    
    
    
    (136
    )GSE mortgage-backed securities
    
    
    23
    
    
    
    93,396
    
    
    
    (2,248
    )
    
    
    
    
    
    
    
    
    
    
    93,396
    
    
    
    (2,248
    )Total
    
    
    34
    
    
    $
    128,206
    
    
    $
    (2,645
    )
    
    $
    7,037
    
    
    $
    (1,053
    )
    
    $
    135,243
    
    
    $
    (3,698
    )At December 31, 2010:GSE obligations
    
    
    7
    
    
    $
    39,599
    
    
    $
    (394
    )
    
    $
    
    
    
    $
    
    
    
    $
    39,599
    
    
    $
    (394
    )Trust preferred CDOs
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    562
    
    
    
    (956
    )
    
    
    562
    
    
    
    (956
    )Collateralized mortgage
obligations
    
    
    3
    
    
    
    1,912
    
    
    
    (12
    )
    
    
    7,896
    
    
    
    (1,222
    )
    
    
    9,808
    
    
    
    (1,234
    )GSE mortgage-backed securities
    
    
    15
    
    
    
    60,592
    
    
    
    (1,822
    )
    
    
    
    
    
    
    
    
    
    
    60,592
    
    
    
    (1,822
    )Total
    
    
    27
    
    
    $
    102,103
    
    
    $
    (2,228
    )
    
    $
    8,458
    
    
    $
    (2,178
    )
    
    $
    110,561
    
    
    $
    (4,406
    )
  After One, But
    
    
    After Five, ButWithin One Year
    
    
    Within Five Years
    
    
    Within Ten Years
    
    
    After Ten YearsAmortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value(In thousands)At March 31, 2011:GSE obligations
    
    $
    16,000
    
    
    $
    16,222
    
    
    $
    64,984
    
    
    $
    64,697
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Trust preferred CDOs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,518
    
    
    
    601Collateralized mortgage
obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,189
    
    
    
    13,522
    
    
    
    11,406
    
    
    
    11,356GSE mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    1,988
    
    
    
    2,067
    
    
    
    9,577
    
    
    
    10,194
    
    
    
    240,637
    
    
    
    242,920Total
    
    $
    16,000
    
    
    $
    16,222
    
    
    $
    66,972
    
    
    $
    66,764
    
    
    $
    22,766
    
    
    $
    23,716
    
    
    $
    253,561
    
    
    $
    254,877At December 31, 2010:GSE obligations
    
    $
    
    
    
    $
    
    
    
    $
    70,997
    
    
    $
    71,076
    
    
    $
    9,995
    
    
    $
    9,957
    
    
    $
    
    
    
    $
    Trust preferred CDOs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,518
    
    
    
    562Collateralized mortgage
obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,059
    
    
    
    15,426
    
    
    
    13,827
    
    
    
    12,743GSE mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    2,220
    
    
    
    2,315
    
    
    
    10,396
    
    
    
    11,055
    
    
    
    233,390
    
    
    
    236,891Total
    
    $
    
    
    
    $
    
    
    
    $
    73,217
    
    
    $
    73,391
    
    
    $
    35,450
    
    
    $
    36,438
    
    
    $
    248,735
    
    
    $
    250,196
    10




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##### Table of Contents



Credit Component of Other-Than-Temporary Impairment Losses For Whicha Portion Was Recognized in OtherComprehensive Income2011
    
    
    2010(In thousands)Balance, January 1
    
    $
    (1,416
    )
    
    $
    (384
    )Credit losses for which an
other-than-temporary
impairment was previously
recognized
    
    
    
    
    
    
    (571
    )Balance, March 31
    
    $
    (1,416
    )
    
    $
    (955
    )
   11




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##### Table of Contents



(6) Credit Quality of Loans and Leases and Allowance for Loan and Lease Losses
   March 31, 2011
    
    
    December 31, 201090+
    
    
    
    
    
    
    
    
    
    
    90+Days,
    
    
    
    
    
    
    
    
    
    
    Days,Still
    
    
    
    
    
    
    
    
    
    
    StillNonaccrual
    
    
    Accruing
    
    
    Total
    
    
    Nonaccrual
    
    
    Accruing
    
    
    Total(In thousands)Commercial loans and
leases:Commercial real estate
 owner occupied
    
    $
    4,342
    
    
    $
    450
    
    
    $
    4,792
    
    
    $
    5,272
    
    
    $
    
    
    
    $
    5,272Commercial
and industrial
    
    
    2,138
    
    
    
    117
    
    
    
    2,255
    
    
    
    2,462
    
    
    
    
    
    
    
    2,462Multifamily
    
    
    1,050
    
    
    
    
    
    
    
    1,050
    
    
    
    717
    
    
    
    
    
    
    
    717Small business
    
    
    981
    
    
    
    78
    
    
    
    1,059
    
    
    
    1,090
    
    
    
    
    
    
    
    1,090Construction
    
    
    232
    
    
    
    
    
    
    
    232
    
    
    
    470
    
    
    
    
    
    
    
    470Leases and other
    
    
    591
    
    
    
    
    
    
    
    591
    
    
    
    581
    
    
    
    
    
    
    
    581Total commercial loans and
leases
    
    
    9,334
    
    
    
    645
    
    
    
    9,979
    
    
    
    10,592
    
    
    
    
    
    
    
    10,592Residential mortgage loans:One- to four-family
adjustable rate
    
    
    3,972
    
    
    
    
    
    
    
    3,972
    
    
    
    4,089
    
    
    
    
    
    
    
    4,089One- to four-family
fixed rate
    
    
    954
    
    
    
    
    
    
    
    954
    
    
    
    956
    
    
    
    
    
    
    
    956Total residential mortgage
loans
    
    
    4,926
    
    
    
    
    
    
    
    4,926
    
    
    
    5,045
    
    
    
    
    
    
    
    5,045Consumer and other loans:Home equity
 term loans
    
    
    919
    
    
    
    
    
    
    
    919
    
    
    
    826
    
    
    
    
    
    
    
    826Home equity  lines of
credit
    
    
    74
    
    
    
    
    
    
    
    74
    
    
    
    50
    
    
    
    
    
    
    
    50Total consumer and other
loans
    
    
    993
    
    
    
    
    
    
    
    993
    
    
    
    876
    
    
    
    
    
    
    
    876Total nonperforming loans
and leases
    
    $
    15,253
    
    
    $
    645
    
    
    $
    15,898
    
    
    $
    16,513
    
    
    $
    
    
    
    $
    16,513
  12




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##### Table of Contents



March 31, 201130-59
    
    
    60-89
    
    
    90+Days
    
    
    Days
    
    
    DaysPast
    
    
    Past
    
    
    PastDue
    
    
    Due
    
    

Due (1)
    
    
    Total(In thousands)Commercial loans and leases:Commercial
real estate  nonowner occupied
    
    $
    380
    
    
    $
    
    
    
    $
    
    
    
    $
    380Commercial real estate  owner occupied
    
    
    2,633
    
    
    
    
    
    
    
    450
    
    
    
    3,083Commercial and industrial
    
    
    783
    
    
    
    1,167
    
    
    
    117
    
    
    
    2,067Multifamily
    
    
    401
    
    
    
    
    
    
    
    
    
    
    
    401Small business
    
    
    738
    
    
    
    504
    
    
    
    78
    
    
    
    1,320Leases and other
    
    
    1,348
    
    
    
    524
    
    
    
    
    
    
    
    1,872Total past due commercial loans and leases
    
    
    6,283
    
    
    
    2,195
    
    
    
    645
    
    
    
    9,123Residential mortgage loans:One- to four-family adjustable
    
    
    2,115
    
    
    
    979
    
    
    
    
    
    
    
    3,094One- to four family fixed rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total past due residential mortgage loans
    
    
    2,115
    
    
    
    979
    
    
    
    
    
    
    
    3,094Consumer and other loans:Home equity  term loans
    
    
    816
    
    
    
    
    
    
    
    
    
    
    
    816Home equity  lines of credit
    
    
    386
    
    
    
    
    
    
    
    
    
    
    
    386Unsecured and other
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Total past due consumer and other loans
    
    
    1,202
    
    
    
    5
    
    
    
    
    
    
    
    1,207Total past due loans and leases
    
    $
    9,600
    
    
    $
    3,179
    
    
    $
    645
    
    
    $
    13,424
 December 31, 201030-59
    
    
    60-89
    
    
    90+Days
    
    
    Days
    
    
    DaysPast
    
    
    Past
    
    
    PastDue
    
    
    Due
    
    

Due (1)
    
    
    Total(In thousands)Commercial loans and leases:Commercial real estate  nonowner occupied
    
    $
    282
    
    
    $
    143
    
    
    $
    
    
    
    $
    425Commercial real estate  owner occupied
    
    
    832
    
    
    
    
    
    
    
    
    
    
    
    832Commercial and industrial
    
    
    346
    
    
    
    204
    
    
    
    
    
    
    
    550Multifamily
    
    
    299
    
    
    
    661
    
    
    
    
    
    
    
    960Small business
    
    
    812
    
    
    
    180
    
    
    
    
    
    
    
    992Leases and other
    
    
    1,053
    
    
    
    711
    
    
    
    
    
    
    
    1,764Total past due commercial loans and leases
    
    
    3,624
    
    
    
    1,899
    
    
    
    
    
    
    
    5,523Residential mortgage loans:One- to four-family adjustable
    
    
    2,005
    
    
    
    415
    
    
    
    
    
    
    
    2,420One- to four family fixed rate
    
    
    142
    
    
    
    
    
    
    
    
    
    
    
    142Total past due residential mortgage loans
    
    
    2,147
    
    
    
    415
    
    
    
    
    
    
    
    2,562Consumer and other loans:Home equity  term loans
    
    
    398
    
    
    
    115
    
    
    
    
    
    
    
    513Home equity  lines of credit
    
    
    299
    
    
    
    
    
    
    
    
    
    
    
    299Unsecured and other
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    7Total past due consumer and other loans
    
    
    704
    
    
    
    115
    
    
    
    
    
    
    
    819Total past
due loans and leases
    
    $
    6,475
    
    
    $
    2,429
    
    
    $
    
    
    
    $
    8,904
 (1)
    
    90+ Days Past Due includes only those loans and leases that are still
accruing. All other loans and leases 90 days or more are included as a component of
nonaccrual loans and leases.   13




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##### Table of Contents



14




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##### Table of Contents



Three Months Ended March 31,2011
    
    
    2010(In thousands)Balance at beginning of period
    
    $
    18,654
    
    
    $
    16,536Loans and leases charged-off:Commercial loans and leases
    
    
    (1,288
    )
    
    
    (1,163
    )Residential mortgage loans
    
    
    (379
    )
    
    
    (347
    )Consumer and other loans
    
    
    (19
    )
    
    
    (102
    )Total loans and leases charged-off
    
    
    (1,686
    )
    
    
    (1,612
    )Recoveries of loans and leases previously charged-off:Commercial loans and leases
    
    
    122
    
    
    
    97Residential mortgage loans
    
    
    
    
    
    
    Consumer and other loans
    
    
    7
    
    
    
    4Total recoveries of loans and leases previously charged-off
    
    
    129
    
    
    
    101Net charge-offs
    
    
    (1,557
    )
    
    
    (1,511
    )Provision for loan and lease losses charged against incomeCommercial loans and leases
    
    
    923
    
    
    
    857Residential mortgage loans
    
    
    (74
    )
    
    
    78Consumer and other loans
    
    
    276
    
    
    
    665Total provision for loan and lease losses charged against income
    
    
    1,125
    
    
    
    1,600Balance at end of period
    
    $
    18,222
    
    
    $
    16,625
   15




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##### Table of Contents



Individually Evaluated for
    
    
    Collectively Evaluated forImpairment
    
    
    ImpairmentAllowance
    
    
    
    
    
    
    Allowancefor Loan
    
    
    
    
    
    
    for LoanRecorded
    
    
    and Lease
    
    
    Recorded
    
    
    and LeaseInvestment
    
    
    Losses
    
    
    Investment
    
    
    Losses(In thousands)At March 31, 2011:Commercial loans and leases:Commercial real estate  nonowner
occupied
    
    $
    
    
    
    $
    
    
    
    $
    196,353
    
    
    $
    2,654Commercial real estate  owner occupied
    
    
    4,342
    
    
    
    93
    
    
    
    178,769
    
    
    
    3,618Commercial and industrial
    
    
    2,126
    
    
    
    260
    
    
    
    158,878
    
    
    
    2,487Multifamily
    
    
    955
    
    
    
    85
    
    
    
    83,817
    
    
    
    1,452Small business
    
    
    361
    
    
    
    86
    
    
    
    61,872
    
    
    
    1,239Construction
    
    
    232
    
    
    
    
    
    
    
    28,041
    
    
    
    431Leases and other
    
    
    125
    
    
    
    108
    
    
    
    66,069
    
    
    
    475Total commercial loans and leases
    
    
    8,141
    
    
    
    632
    
    
    
    773,799
    
    
    
    12,356Residential mortgage loans:One- to four-family adjustable rate
    
    
    545
    
    
    
    7
    
    
    
    100,431
    
    
    
    1,420One- to four-family fixed rate
    
    
    
    
    
    
    
    
    
    
    59,106
    
    
    
    232Total residential mortgage loans
    
    
    545
    
    
    
    7
    
    
    
    159,537
    
    
    
    1,652Consumer and other loans:Home equity  term loans
    
    
    895
    
    
    
    12
    
    
    
    124,744
    
    
    
    715Home equity  lines of credit
    
    
    
    
    
    
    
    
    
    
    82,038
    
    
    
    738Unsecured and other
    
    
    
    
    
    
    
    
    
    
    1,489
    
    
    
    113Total consumer and other loans
    
    
    895
    
    
    
    12
    
    
    
    208,271
    
    
    
    1,566Premium on loans acquired
    
    
    
    
    
    
    
    
    
    
    576
    
    
    
    Net deferred loan origination costs
    
    
    
    
    
    
    
    
    
    
    2,684
    
    
    
    Total loans and leases
    
    $
    9,581
    
    
    $
    651
    
    
    $
    1,144,867
    
    
    $
    15,574At December 31, 2010:Commercial loans and leases:Commercial real estate  nonowner
occupied
    
    $
    
    
    
    $
    
    
    
    $
    200,809
    
    
    $
    2,700Commercial real estate  owner occupied
    
    
    5,272
    
    
    
    392
    
    
    
    174,494
    
    
    
    3,462Commercial and industrial
    
    
    2,288
    
    
    
    287
    
    
    
    155,591
    
    
    
    2,323Multifamily
    
    
    717
    
    
    
    108
    
    
    
    79,217
    
    
    
    1,387Small business
    
    
    462
    
    
    
    141
    
    
    
    62,379
    
    
    
    1,318Construction
    
    
    470
    
    
    
    220
    
    
    
    29,879
    
    
    
    452Leases and other
    
    
    125
    
    
    
    108
    
    
    
    66,770
    
    
    
    472Total commercial loans and leases
    
    
    9,334
    
    
    
    1,256
    
    
    
    769,139
    
    
    
    12,114Residential mortgage loans:One- to four-family adjustable rate
    
    
    549
    
    
    
    7
    
    
    
    105,792
    
    
    
    1,313One- to four-family fixed rate
    
    
    
    
    
    
    
    
    
    
    57,948
    
    
    
    460Total residential mortgage loans
    
    
    549
    
    
    
    7
    
    
    
    163,740
    
    
    
    1,773Consumer and other loans:Home equity  term loans
    
    
    906
    
    
    
    101
    
    
    
    124,208
    
    
    
    721Home equity  lines of credit
    
    
    
    
    
    
    
    
    
    
    82,778
    
    
    
    745Unsecured and other
    
    
    
    
    
    
    
    
    
    
    1,511
    
    
    
    114Total consumer and other loans
    
    
    906
    
    
    
    101
    
    
    
    208,497
    
    
    
    1,580Premium on loans acquired
    
    
    
    
    
    
    
    
    
    
    598
    
    
    
    Net deferred loan origination costs
    
    
    
    
    
    
    
    
    
    
    2,726
    
    
    
    Total loans and leases
    
    $
    10,789
    
    
    $
    1,364
    
    
    $
    1,144,700
    
    
    $
    15,467
  16




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##### Table of Contents



March 31, 2011Not
    
    
    TotalRequiring
    
    
    Requiring a
    
    
    Impaireda Specific
    
    
    Specific
    
    
    Loans and
    
    
    UnpaidReserve
    
    
    Reserve
    
    
    Leases
    
    
    Principal(In thousands)Commercial loans and leases:Commercial real estate  owner occupied
    
    $
    2,553
    
    
    $
    1,789
    
    
    $
    4,342
    
    
    $
    5,068Commercial and industrial
    
    
    1,865
    
    
    
    261
    
    
    
    2,126
    
    
    
    3,581Multifamily
    
    
    707
    
    
    
    248
    
    
    
    955
    
    
    
    1,272Small business
    
    
    148
    
    
    
    213
    
    
    
    361
    
    
    
    366Construction
    
    
    
    
    
    
    232
    
    
    
    232
    
    
    
    469Leases and other
    
    
    125
    
    
    
    
    
    
    
    125
    
    
    
    125Total impaired commercial loans and leases
    
    
    5,398
    
    
    
    2,743
    
    
    
    8,141
    
    
    
    10,881Residential mortgage loans:One- to four-family adjustable rate
    
    
    258
    
    
    
    287
    
    
    
    545
    
    
    
    545Total impaired residential mortgage loans
    
    
    258
    
    
    
    287
    
    
    
    545
    
    
    
    545Consumer and other loans:Home equity  term loans
    
    
    736
    
    
    
    159
    
    
    
    895
    
    
    
    895Total impaired consumer and other loans
    
    
    736
    
    
    
    159
    
    
    
    895
    
    
    
    895Total impaired loans and leases
    
    $
    6,392
    
    
    $
    3,189
    
    
    $
    9,581
    
    
    $
    12,321
 December 31, 2010Not
    
    
    TotalRequiring
    
    
    Requiring a
    
    
    Impaireda Specific
    
    
    Specific
    
    
    Loans and
    
    
    UnpaidReserve
    
    
    Reserve
    
    
    Leases
    
    
    Principal(In thousands)Commercial loans and leases:Commercial real estate  owner occupied
    
    $
    3,483
    
    
    $
    1,789
    
    
    $
    5,272
    
    
    $
    5,998Commercial and industrial
    
    
    2,008
    
    
    
    280
    
    
    
    2,288
    
    
    
    3,743Multifamily
    
    
    717
    
    
    
    
    
    
    
    717
    
    
    
    717Small business
    
    
    312
    
    
    
    150
    
    
    
    462
    
    
    
    538Construction
    
    
    470
    
    
    
    
    
    
    
    470
    
    
    
    470Leases and other
    
    
    125
    
    
    
    
    
    
    
    125
    
    
    
    125Total impaired commercial loans and leases
    
    
    7,115
    
    
    
    2,219
    
    
    
    9,334
    
    
    
    11,591Residential mortgage loans:One- to four-family adjustable rate
    
    
    259
    
    
    
    290
    
    
    
    549
    
    
    
    731Total impaired residential mortgage loans
    
    
    259
    
    
    
    290
    
    
    
    549
    
    
    
    731Consumer and other loans:Home equity  term loans
    
    
    745
    
    
    
    161
    
    
    
    906
    
    
    
    906Total impaired consumer and other loans
    
    
    745
    
    
    
    161
    
    
    
    906
    
    
    
    906Total impaired loans and leases
    
    $
    8,119
    
    
    $
    2,670
    
    
    $
    10,789
    
    
    $
    13,228
  17




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##### Table of Contents



Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Interest
    
    
    
    
    
    
    
    
    
    
    InterestTotal
    
    
    Income
    
    
    
    
    
    
    
    
    
    
    IncomeAverage
    
    
    Interest
    
    
    Recognized
    
    
    Average
    
    
    Interest
    
    
    RecognizedRecorded
    
    
    Income
    
    
    Using Cash-
    
    
    Recorded
    
    
    Income
    
    
    Using Cash-Investment
    
    
    Recognized
    
    
    Basis
    
    
    Investment
    
    
    Recognized
    
    
    Basis(In thousands)Commercial loans and leases:Commercial real estate  nonowner
occupied
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,067
    
    
    $
    
    
    
    $
    Commercial real estate  owner
occupied
    
    
    4,772
    
    
    
    76
    
    
    
    
    
    
    
    4,742
    
    
    
    
    
    
    
    Commercial and industrial
    
    
    2,265
    
    
    
    23
    
    
    
    
    
    
    
    1,807
    
    
    
    
    
    
    
    Multifamily
    
    
    1,057
    
    
    
    1
    
    
    
    
    
    
    
    154
    
    
    
    
    
    
    
    Small business
    
    
    422
    
    
    
    
    
    
    
    
    
    
    
    761
    
    
    
    1
    
    
    
    Construction
    
    
    351
    
    
    
    
    
    
    
    
    
    
    
    529
    
    
    
    
    
    
    
    Leases and other
    
    
    125
    
    
    
    2
    
    
    
    
    
    
    
    889
    
    
    
    2
    
    
    
    Total impaired commercial loans
and leases
    
    
    8,992
    
    
    
    102
    
    
    
    
    
    
    
    9,949
    
    
    
    3
    
    
    
    Residential mortgage loans:One- to four-family adjustable rate
    
    
    547
    
    
    
    
    
    
    
    
    
    
    
    266
    
    
    
    
    
    
    
    One- to four-family fixed rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total impaired residential
mortgage loans
    
    
    547
    
    
    
    
    
    
    
    
    
    
    
    266
    
    
    
    
    
    
    
    Consumer and other loans:Home equity  term loans
    
    
    901
    
    
    
    
    
    
    
    
    
    
    
    177
    
    
    
    
    
    
    
    Home equity  lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    Total impaired consumer and
other loans
    
    
    901
    
    
    
    
    
    
    
    
    
    
    
    226
    
    
    
    
    
    
    
    Total impaired loans and leases
    
    $
    10,440
    
    
    $
    102
    
    
    $
    
    
    
    $
    10,441
    
    
    $
    3
    
    
    $
    
  18




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##### Table of Contents



March 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Commercial loans and leases (risk rating):Pass-rated
    
    $
    741,575
    
    
    $
    735,869Special mention
    
    
    15,527
    
    
    
    19,825Substandard
    
    
    24,838
    
    
    
    22,779Total commercial loans and leases
    
    
    781,940
    
    
    
    778,473Residential mortgage loans (credit score):Greater than 750
    
    
    85,280
    
    
    
    84,695725  750
    
    
    14,598
    
    
    
    18,930680  724
    
    
    18,933
    
    
    
    19,310650  679
    
    
    8,348
    
    
    
    6,558620  649
    
    
    3,934
    
    
    
    6,278Less than 620
    
    
    18,976
    
    
    
    19,883Data not available
    
    
    10,013
    
    
    
    8,635Total residential mortgage loans
    
    
    160,082
    
    
    
    164,289Consumer and other loans (credit score):Greater than 750
    
    
    153,289
    
    
    
    151,710725  750
    
    
    21,680
    
    
    
    21,984680  724
    
    
    19,008
    
    
    
    20,252650  679
    
    
    5,909
    
    
    
    5,605620  649
    
    
    1,922
    
    
    
    2,756Less than 620
    
    
    6,153
    
    
    
    6,006Data not available
    
    
    1,205
    
    
    
    1,090Total consumer and other loans
    
    
    209,166
    
    
    
    209,403Premium on loans acquired
    
    
    576
    
    
    
    598Net deferred loan origination costs
    
    
    2,684
    
    
    
    2,726Total loans and leases
    
    $
    1,154,448
    
    
    $
    1,155,489
 (7) Derivatives
   19




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##### Table of Contents



Asset DerivativesMarch 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Other AssetsDerivatives notdesignated as hedging instrumentsInterest rate products
    
    $
    614
    
    
    $
    790Total derivatives notdesignated as hedging instruments
    
    $
    614
    
    
    $
    790
 Liability DerivativesMarch 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Other LiabilitiesDerivatives notdesignated as hedging instrumentsInterest rate products
    
    $
    648
    
    
    $
    832Total derivatives notdesignated as hedging instruments
    
    $
    648
    
    
    $
    832
  Amount of Gain Recognized inLocation of Gain
    

Income on Derivative (1)Derivatives Not Designated as Hedging
    
    Recognized in Income on
    
    Three Months Ended March 31,Instruments
    
    Derivative
    
    2011
    
    
    2010(In thousands)Interest Rate Products
    
    Loan related fees
    
    $
    8
    
    
    $
    32Total
    
    
    
    $
    8
    
    
    $
    32
 (1)
    
    The amount of gain recognized in income represents net fee income and changes
related to the fair value of the interest rate products.   20




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##### Table of Contents



(8) Fair Value of Financial Instruments
 Fair Value Measurements and Disclosures
      21




---



##### Table of Contents



Fair Value Measurements at March 31, 2011 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)GSE obligations
    
    $
    80,919
    
    
    $
    
    
    
    $
    80,919
    
    
    $
    Trust preferred CDOs
    
    
    601
    
    
    
    
    
    
    
    601
    
    
    
    Collateralized mortgage obligations
    
    
    24,878
    
    
    
    
    
    
    
    24,878
    
    
    
    GSE mortgage-backed securities
    
    
    255,181
    
    
    
    
    
    
    
    255,181
    
    
    
    Total available for sale securities
    
    
    361,579
    
    
    
    
    
    
    
    361,579
    
    
    
    Interest rate swap assets
    
    
    614
    
    
    
    
    
    
    
    614
    
    
    
    Interest rate swap liabilities
    
    
    648
    
    
    
    
    
    
    
    648
    
    
    
    Fair Value Measurements at December 31, 2010 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)GSE obligations
    
    $
    81,034
    
    
    $
    
    
    
    $
    81,034
    
    
    $
    Trust preferred CDOs
    
    
    562
    
    
    
    
    
    
    
    562
    
    
    
    Collateralized mortgage obligations
    
    
    28,168
    
    
    
    
    
    
    
    28,168
    
    
    
    GSE mortgage-backed securities
    
    
    250,261
    
    
    
    
    
    
    
    250,261
    
    
    
    Total available for sale securities
    
    
    360,025
    
    
    
    
    
    
    
    360,025
    
    
    
    Interest rate swap assets
    
    
    790
    
    
    
    
    
    
    
    790
    
    
    
    Interest rate swap liabilities
    
    
    832
    
    
    
    
    
    
    
    832
    
    
    
    
   22




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##### Table of Contents



Available for sale securities 
 Interest rate swaps  Note 7  Derivatives.
   Fair Value Measurements at March 31, 2011 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Collateral-dependent loans and leases
    
    $
    2,539
    
    
    $
    
    
    
    $
    2,539
    
    
    $
    Other real estate owned
    
    
    445
    
    
    
    
    
    
    
    445
    
    
    
    
 Fair Value Measurements at March 31, 2010 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Collateral-dependent loans and leases
    
    $
    2,586
    
    
    $
    
    
    
    $
    2,586
    
    
    $
    Other real estate owned
    
    
    724
    
    
    
    
    
    
    
    724
    
    
    
    
 Impaired loans 
 Other real estate owned and non-real estate foreclosed assets 
  23




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##### Table of Contents



Loans and leases receivable
 Stock in the Federal Home Loan Bank of Boston
 Deposits
 Wholesale repurchase agreements
 Federal Home Loan Bank of Boston borrowings
 Subordinated deferrable interest debentures
 Financial instruments with off-balance sheet risk
  24




---



##### Table of Contents



March 31, 2011
    
    
    December 31, 2010Book
    
    
    Estimated
    
    
    Book
    
    
    EstimatedValue
    
    
    Fair Value
    
    
    Value
    
    
    Fair Value(In thousands)Assets:Cash and due from banks
    
    $
    16,573
    
    
    $
    16,573
    
    
    $
    14,384
    
    
    $
    14,384Overnight investments
    
    
    551
    
    
    
    551
    
    
    
    395
    
    
    
    395Available for sale securities
    
    
    361,579
    
    
    
    361,579
    
    
    
    360,025
    
    
    
    360,025Stock in the FHLB
    
    
    16,274
    
    
    
    16,274
    
    
    
    16,274
    
    
    
    16,274Loans and leases receivable, net of
allowance for loan and lease losses:Commercial loans and leases
    
    
    769,109
    
    
    
    779,422
    
    
    
    765,446
    
    
    
    776,737Residential mortgage loans
    
    
    158,795
    
    
    
    164,037
    
    
    
    162,904
    
    
    
    166,744Consumer and other loans
    
    
    208,322
    
    
    
    201,776
    
    
    
    208,485
    
    
    
    203,545Interest rate swaps
    
    
    614
    
    
    
    614
    
    
    
    790
    
    
    
    790Accrued interest receivable
    
    
    4,411
    
    
    
    4,411
    
    
    
    4,842
    
    
    
    4,842Liabilities:Deposits:Demand deposit accounts
    
    $
    254,291
    
    
    $
    254,291
    
    
    $
    264,274
    
    
    $
    264,274NOW accounts
    
    
    65,127
    
    
    
    65,127
    
    
    
    70,327
    
    
    
    70,327Money market accounts
    
    
    113,126
    
    
    
    113,126
    
    
    
    96,285
    
    
    
    96,285Savings accounts
    
    
    343,286
    
    
    
    343,286
    
    
    
    341,667
    
    
    
    341,667Certificate of deposit accounts
    
    
    325,831
    
    
    
    327,327
    
    
    
    347,613
    
    
    
    349,386Overnight and short-term borrowings
    
    
    36,068
    
    
    
    36,068
    
    
    
    40,997
    
    
    
    40,997Wholesale repurchase agreements
    
    
    19,801
    
    
    
    19,896
    
    
    
    20,000
    
    
    
    20,190FHLB borrowings
    
    
    273,582
    
    
    
    298,895
    
    
    
    260,889
    
    
    
    285,819Subordinated deferrable interest
debentures
    
    
    13,403
    
    
    
    15,649
    
    
    
    13,403
    
    
    
    15,645Interest rate swaps
    
    
    649
    
    
    
    649
    
    
    
    832
    
    
    
    832Accrued interest payable
    
    
    1,244
    
    
    
    1,244
    
    
    
    1,616
    
    
    
    1,616
 (9) Contingent Liabilities
    25




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##### Table of Contents



(10) Transfers and Servicing
    26




---



##### Table of Contents



(11) Subsequent Events
        27




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis
 General
 http://www.bankri.com SM
 Critical Accounting Policies
  Overview
  Rate/Volume Analysis Average Balances, Yields and Costs
 Interest Rate Risk
  28




---



##### Table of Contents



Financial Condition  Asset Quality
      29




---



##### Table of Contents



Financial Condition  Executive Summary
  March 31,
    
    
    December 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,2011
    
    
    2010
    
    
    2010
    
    
    2010
    
    
    2010(Dollars in thousands, except per share data)Total assets
    
    $
    1,606,508
    
    
    $
    1,603,759
    
    
    $
    1,573,323
    
    
    $
    1,613,520
    
    
    $
    1,586,778Loans and leases receivable
    
    
    1,154,448
    
    
    
    1,155,489
    
    
    
    1,135,227
    
    
    
    1,136,524
    
    
    
    1,123,838Available for sale securities
    
    
    361,579
    
    
    
    360,025
    
    
    
    342,080
    
    
    
    345,566
    
    
    
    365,110Goodwill, net
    
    
    12,262
    
    
    
    12,262
    
    
    
    12,262
    
    
    
    12,262
    
    
    
    12,262Core deposits (1)
    
    
    775,830
    
    
    
    772,553
    
    
    
    755,105
    
    
    
    813,697
    
    
    
    728,969Certificates of deposit
    
    
    325,831
    
    
    
    347,613
    
    
    
    360,578
    
    
    
    360,323
    
    
    
    378,102Borrowings
    
    
    342,854
    
    
    
    335,289
    
    
    
    301,455
    
    
    
    294,137
    
    
    
    341,344Common shareholders equity
    
    
    130,192
    
    
    
    128,678
    
    
    
    130,769
    
    
    
    129,127
    
    
    
    123,679Book value per common share
    
    
    27.77
    
    
    
    27.53
    
    
    
    27.98
    
    
    
    27.63
    
    
    
    26.69Tangible book value per common share
    
    
    25.15
    
    
    
    24.91
    
    
    
    25.35
    
    
    
    25.00
    
    
    
    24.05Tangible common equity ratio (2) (3)
    
    
    7.40
    %
    
    
    7.31
    %
    
    
    7.59
    %
    
    
    7.30
    %
    
    
    7.08
    %Core deposits to total deposits(1) (3)
    
    
    70.4
    %
    
    
    69.0
    %
    
    
    67.7
    %
    
    
    69.3
    %
    
    
    65.8
    %
 (1)
    
    Core deposits consist of demand deposit, NOW, money market and savings
accounts.(2)
    
    Calculated by dividing common shareholders equity less goodwill by total
assets less goodwill.(3)
    
    Non-GAAP performance measure.    30




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##### Table of Contents



Financial Condition  Detailed Analysis
 Investments
         31




---



##### Table of Contents



Loans and Leases
  Commercial loans and leases 
        32




---



##### Table of Contents



Residential mortgage loans 
 Consumer loans 
  March 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Commercial loans and leases:Commercial real estate  nonowner occupied
    
    $
    196,353
    
    
    $
    200,809Commercial real estate  owner occupied
    
    
    183,111
    
    
    
    179,766Commercial and industrial
    
    
    161,004
    
    
    
    157,879Multifamily
    
    
    84,772
    
    
    
    79,934Small business
    
    
    62,233
    
    
    
    62,841Construction
    
    
    28,273
    
    
    
    30,349Leases and other
    
    
    72,156
    
    
    
    73,054Subtotal
    
    
    787,902
    
    
    
    784,632Unearned lease income
    
    
    (5,962
    )
    
    
    (6,159
    )Net deferred loan origination costs
    
    
    1,756
    
    
    
    1,791Total commercial loans and leases
    
    
    783,696
    
    
    
    780,264Residential mortgage loans:One- to four-family adjustable rate
    
    
    100,976
    
    
    
    106,341One- to four-family fixed rate
    
    
    59,106
    
    
    
    57,948Subtotal
    
    
    160,082
    
    
    
    164,289Premium on loans acquired
    
    
    576
    
    
    
    598Net deferred loan origination fees
    
    
    
    
    
    
    (10
    )Total residential mortgage loans
    
    
    160,658
    
    
    
    164,877Consumer loans:Home equity  term loans
    
    
    125,639
    
    
    
    125,114Home equity  lines of credit
    
    
    82,038
    
    
    
    82,778Unsecured and other
    
    
    1,489
    
    
    
    1,511Subtotal
    
    
    209,166
    
    
    
    209,403Net deferred loan origination costs
    
    
    928
    
    
    
    945Total consumer loans
    
    
    210,094
    
    
    
    210,348Total loans and leases receivable
    
    $
    1,154,448
    
    
    $
    1,155,489
  33




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##### Table of Contents



Deposits
   March 31, 2011
    
    
    December 31, 2010Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    WeightedOf
    
    
    Average
    
    
    
    
    
    
    of
    
    
    AverageAmount
    
    
    Total
    
    
    Rate
    
    
    Amount
    
    
    Total
    
    
    Rate(In thousands)NOW accounts
    
    $
    65,127
    
    
    
    5.9
    %
    
    
    0.06
    %
    
    $
    70,327
    
    
    
    6.3
    %
    
    
    0.06
    %Money market accounts
    
    
    113,126
    
    
    
    10.3
    %
    
    
    0.66
    %
    
    
    96,285
    
    
    
    8.6
    %
    
    
    0.68
    %Savings accounts
    
    
    343,286
    
    
    
    31.1
    %
    
    
    0.32
    %
    
    
    341,667
    
    
    
    30.5
    %
    
    
    0.32
    %Certificate of deposit accounts
    
    
    325,831
    
    
    
    29.6
    %
    
    
    1.05
    %
    
    
    347,613
    
    
    
    31.0
    %
    
    
    1.34
    %Total interest bearing deposits
    
    
    847,370
    
    
    
    76.9
    %
    
    
    0.63
    %
    
    
    855,892
    
    
    
    76.4
    %
    
    
    0.75
    %Noninterest bearing accounts
    
    
    254,291
    
    
    
    23.1
    %
    
    
    0.00
    %
    
    
    264,274
    
    
    
    23.6
    %
    
    
    0.00
    %Total deposits
    
    $
    1,101,661
    
    
    
    100.0
    %
    
    
    0.48
    %
    
    $
    1,120,166
    
    
    
    100.0
    %
    
    
    0.58
    %
  Borrowings
   Asset Quality
  Nonperforming assets 
  34




---



##### Table of Contents



March 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Loans and leases accounted for on a nonaccrual basis
    
    $
    13,840
    
    
    $
    15,069Loans and leases past due 90 days or more, but still accruing
    
    
    645
    
    
    
    Restructured loans and leases on a nonaccrual basis
    
    
    1,413
    
    
    
    1,444Total nonperforming loans and leases
    
    
    15,898
    
    
    
    16,513Other real estate owned
    
    
    1,575
    
    
    
    1,130Total nonperforming assets
    
    $
    17,473
    
    
    $
    17,643Delinquent loans and leases 60-89 days past due
    
    $
    3,179
    
    
    $
    2,429Restructured loans and leases not included in nonperforming assets
    
    
    481
    
    
    
    485Nonperforming loans and leases as a percent of total loans and leases
    
    
    1.38
    %
    
    
    1.43
    %Nonperforming assets as a percent of total assets
    
    
    1.09
    %
    
    
    1.10
    %Delinquent loans and leases 60-89 days past due as a percent of
total loans and leases
    
    
    0.28
    %
    
    
    0.21
    %
   March 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Nonperforming loans and leases:Commercial real estate
    
    $
    4,792
    
    
    $
    5,272Commercial and industrial
    
    
    2,255
    
    
    
    2,462Multifamily
    
    
    1,050
    
    
    
    717Small business
    
    
    1,059
    
    
    
    1,090Construction
    
    
    232
    
    
    
    470Leases
    
    
    591
    
    
    
    581Residential
    
    
    4,926
    
    
    
    5,045Consumer
    
    
    993
    
    
    
    876Total nonperforming loans and leases
    
    $
    15,898
    
    
    $
    16,513
  Higher-Risk Loans 
  35




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##### Table of Contents



March 31, 2011
    
    
    December 31, 2010Allowance
    
    
    
    
    
    
    Allowancefor Loan
    
    
    
    
    
    
    for LoanPrincipal
    
    
    and Lease
    
    
    Principal
    
    
    and LeaseBalance
    
    
    Losses
    
    
    Balance
    
    
    Losses(In thousands)Option ARM mortgages
    
    $
    1,119
    
    
    $
    11
    
    
    $
    1,124
    
    
    $
    11Interest-only residential first mortgages
    
    
    21,852
    
    
    
    995
    
    
    
    23,531
    
    
    
    235Junior lien home equity loans
    
    
    39,226
    
    
    
    351
    
    
    
    40,919
    
    
    
    363Junior lien home equity lines of credit
    
    
    59,206
    
    
    
    533
    
    
    
    60,262
    
    
    
    539Total higher-risk loans
    
    $
    121,403
    
    
    $
    1,890
    
    
    $
    125,836
    
    
    $
    1,148
  Watch List Assets
   Allowance for Loan and Lease Losses
   36




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##### Table of Contents



Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31, 2011
    
    
    March 31, 2010(In thousands)Balance at beginning of period
    
    $
    18,654
    
    
    $
    16,536Loans and leases charged-off:Commercial real estate loans
    
    
    (532
    )
    
    
    (627
    )Commercial and industrial loans
    
    
    (109
    )
    
    
    Small business loans
    
    
    (334
    )
    
    
    (200
    )Construction
    
    
    (237
    )
    
    
    Leases
    
    
    (75
    )
    
    
    (336
    )Residential mortgage loans
    
    
    (379
    )
    
    
    (347
    )Consumer and other loans
    
    
    (20
    )
    
    
    (102
    )Total loans charged-off
    
    
    (1,686
    )
    
    
    (1,612
    )Recoveries of loans and leases previously charged-off:Commercial real estate loans
    
    
    
    
    
    
    79Commercial and industrial loans
    
    
    110
    
    
    
    11Small business loans
    
    
    1
    
    
    
    1Leases
    
    
    11
    
    
    
    6Residential mortgage loans
    
    
    
    
    
    
    Consumer and other loans
    
    
    7
    
    
    
    4Total recoveries of loans previously charged-off
    
    
    129
    
    
    
    101Net charge-offs
    
    
    (1,557
    )
    
    
    (1,511
    )Provision for loan and lease losses charged against income
    
    
    1,125
    
    
    
    1,600Balance at end of period
    
    $
    18,222
    
    
    $
    16,625
  March 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Loan categoryCommercial loans and leases
    
    $
    12,988
    
    
    $
    13,370Residential mortgage loans
    
    
    1,659
    
    
    
    1,780Consumer and other loans
    
    
    1,578
    
    
    
    1,681Unallocated
    
    
    1,997
    
    
    
    1,823Total
    
    $
    18,222
    
    
    $
    18,654
   37




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##### Table of Contents



Results of Operations  Executive Overview
  For the three month periods endedMarch 31,
    
    
    December 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,2011
    
    
    2010
    
    
    2010
    
    
    2010
    
    
    2010(Dollars in thousands, except per share data)Income statement data:Net interest income
    
    $
    13,515
    
    
    $
    13,215
    
    
    $
    13,478
    
    
    $
    13,626
    
    
    $
    13,088Noninterest income
    
    
    2,332
    
    
    
    2,673
    
    
    
    2,289
    
    
    
    2,285
    
    
    
    2,315Noninterest expense
    
    
    11,269
    
    
    
    9,935
    
    
    
    10,350
    
    
    
    10,430
    
    
    
    10,488Net income
    
    
    2,307
    
    
    
    2,126
    
    
    
    2,808
    
    
    
    2,681
    
    
    
    2,219Per share data:Diluted earnings per share
    
    $
    0.49
    
    
    $
    0.45
    
    
    $
    0.60
    
    
    $
    0.57
    
    
    $
    0.48Dividends per common share
    
    $
    0.19
    
    
    $
    0.19
    
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.17Operating ratios:Net interest margin (1) (5)
    
    
    3.58
    %
    
    
    3.49
    %
    
    
    3.61
    %
    
    
    3.67
    %
    
    
    3.52
    %Return on assets (2) (5)
    
    
    0.59
    %
    
    
    0.53
    %
    
    
    0.71
    %
    
    
    0.68
    %
    
    
    0.57
    %Return on equity (3) (5)
    
    
    7.25
    %
    
    
    6.46
    %
    
    
    8.57
    %
    
    
    8.54
    %
    
    
    7.32
    %Efficiency ratio (4) (5)
    
    
    71.11
    %
    
    
    62.53
    %
    
    
    65.64
    %
    
    
    65.55
    %
    
    
    68.09
    %
 (1)
    
    Calculated by dividing annualized net interest income by average
interest-earning assets.(2)
    
    Calculated by dividing annualized net income by average total assets.(3)
    
    Calculated by dividing annualized net income applicable to common shares
by average common shareholders equity.(4)
    
    Calculated by dividing noninterest expense by net interest income plus
noninterest income.(5)
    
    Non-GAAP performance measure.     38




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##### Table of Contents



Results of Operations  Comparison of the Three Months Ended March 31, 2011 and 2010
 General
  Net Interest Income
   39




---



##### Table of Contents



Average Balances, Yields and Costs
 For the three months ended March 31,2011
    
    
    2010Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Earned/
    
    
    Average
    
    
    Average
    
    
    Earned/
    
    
    Average(In thousands)
    
    Balance
    
    
    Paid
    
    
    Yield
    
    
    Balance
    
    
    Paid
    
    
    YieldAssetsEarning assets:Overnight investments
    
    $
    762
    
    
    $
    
    
    
    
    0.19
    %
    
    $
    2,292
    
    
    $
    5
    
    
    
    0.87
    %Available for sale securities
    
    
    355,404
    
    
    
    3,022
    
    
    
    3.40
    %
    
    
    372,516
    
    
    
    3,779
    
    
    
    4.06
    %Stock in the FHLB
    
    
    16,274
    
    
    
    12
    
    
    
    0.31
    %
    
    
    16,274
    
    
    
    
    
    
    
    0.00
    %Loans and leases receivable:Commercial loans and leases
    
    
    777,681
    
    
    
    10,656
    
    
    
    5.54
    %
    
    
    730,907
    
    
    
    10,311
    
    
    
    5.71
    %Residential mortgage loans
    
    
    163,640
    
    
    
    1,699
    
    
    
    4.15
    %
    
    
    172,408
    
    
    
    2,029
    
    
    
    4.71
    %Consumer and other loans
    
    
    210,548
    
    
    
    2,195
    
    
    
    4.23
    %
    
    
    203,840
    
    
    
    2,228
    
    
    
    4.43
    %Total earning assets
    
    
    1,524,309
    
    
    
    17,584
    
    
    
    4.65
    %
    
    
    1,498,237
    
    
    
    18,352
    
    
    
    4.94
    %Cash and due from banks
    
    
    17,117
    
    
    
    
    
    
    
    
    
    
    
    13,451Allowance for loan and lease losses
    
    
    (18,528
    )
    
    
    
    
    
    
    
    
    
    
    (17,225
    )Premises and equipment
    
    
    11,797
    
    
    
    
    
    
    
    
    
    
    
    12,359Goodwill, net
    
    
    12,262
    
    
    
    
    
    
    
    
    
    
    
    12,179Accrued interest receivable
    
    
    4,269
    
    
    
    
    
    
    
    
    
    
    
    4,372Bank-owned life insurance
    
    
    31,388
    
    
    
    
    
    
    
    
    
    
    
    30,118Prepaid expenses and other assets
    
    
    15,366
    
    
    
    
    
    
    
    
    
    
    
    18,579Total assets
    
    $
    1,597,980
    
    
    
    
    
    
    
    
    
    
    $
    1,572,070Liabilities and Shareholders EquityInterest-bearing liabilities:Deposits:NOW accounts
    
    $
    68,042
    
    
    $
    46
    
    
    
    0.27
    %
    
    $
    68,669
    
    
    $
    15
    
    
    
    0.08
    %Money market accounts
    
    
    105,289
    
    
    
    172
    
    
    
    0.66
    %
    
    
    71,387
    
    
    
    149
    
    
    
    0.85
    %Savings accounts
    
    
    343,366
    
    
    
    270
    
    
    
    0.32
    %
    
    
    369,750
    
    
    
    531
    
    
    
    0.58
    %Certificate of deposit accounts
    
    
    335,236
    
    
    
    971
    
    
    
    1.17
    %
    
    
    385,599
    
    
    
    1,583
    
    
    
    1.67
    %Overnight and short-term borrowings
    
    
    39,769
    
    
    
    10
    
    
    
    0.10
    %
    
    
    39,161
    
    
    
    18
    
    
    
    0.19
    %Wholesale repurchase agreements
    
    
    20,045
    
    
    
    139
    
    
    
    2.77
    %
    
    
    18,222
    
    
    
    139
    
    
    
    3.06
    %FHLB borrowings
    
    
    272,971
    
    
    
    2,296
    
    
    
    3.37
    %
    
    
    271,742
    
    
    
    2,665
    
    
    
    3.92
    %Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    165
    
    
    
    4.94
    %
    
    
    13,403
    
    
    
    164
    
    
    
    4.90
    %Total interest-bearing liabilities
    
    
    1,198,121
    
    
    
    4,069
    
    
    
    1.38
    %
    
    
    1,237,933
    
    
    
    5,264
    
    
    
    1.72
    %Noninterest-bearing deposits
    
    
    254,722
    
    
    
    
    
    
    
    
    
    
    
    199,735Other liabilities
    
    
    16,076
    
    
    
    
    
    
    
    
    
    
    
    11,427Total liabilities
    
    
    1,468,919
    
    
    
    
    
    
    
    
    
    
    
    1,449,095Shareholders equity:
    
    
    129,061
    
    
    
    
    
    
    
    
    
    
    
    122,975Total liabilities and shareholders equity
    
    $
    1,597,980
    
    
    
    
    
    
    
    
    
    
    $
    1,572,070Net interest income
    
    
    
    
    
    $
    13,515
    
    
    
    
    
    
    
    
    
    
    $
    13,088Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.27
    %
    
    
    
    
    
    
    
    
    
    
    3.22
    %Net interest rate margin
    
    
    
    
    
    
    
    
    
    
    3.58
    %
    
    
    
    
    
    
    
    
    
    
    3.52
    %
  40




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##### Table of Contents



Rate/Volume Analysis 
 Three Months Ended March 31,2011 vs. 2010Increase/(Decrease) Due to(In thousands)
    
    Rate
    
    
    Volume
    
    
    TotalInterest income:Overnight Investments
    
    $
    (3
    )
    
    $
    (2
    )
    
    $
    (5
    )Available for sale securities
    
    
    (563
    )
    
    
    (194
    )
    
    
    (757
    )Stock in the FHLB
    
    
    12
    
    
    
    
    
    
    
    12Commercial loans and leases
    
    
    (297
    )
    
    
    642
    
    
    
    345Residential mortgage loans
    
    
    (253
    )
    
    
    (77
    )
    
    
    (330
    )Consumer and other loans
    
    
    (142
    )
    
    
    109
    
    
    
    (33
    )Total interest income
    
    
    (1,246
    )
    
    
    478
    
    
    
    (768
    )Interest expense:NOW accounts
    
    
    31
    
    
    
    
    
    
    
    31Money market accounts
    
    
    (37
    )
    
    
    60
    
    
    
    23Savings accounts
    
    
    (226
    )
    
    
    (35
    )
    
    
    (261
    )Certificate of deposit accounts
    
    
    (412
    )
    
    
    (200
    )
    
    
    (612
    )Overnight and short-term borrowings
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )Wholesales repurchase agreements
    
    
    (13
    )
    
    
    13
    
    
    
    FHLB borrowings
    
    
    (381
    )
    
    
    12
    
    
    
    (369
    )Subordinated deferrable interest debentures
    
    
    1
    
    
    
    
    
    
    
    1Total interest expense
    
    
    (1,045
    )
    
    
    (150
    )
    
    
    (1,195
    )Net interest income
    
    $
    (201
    )
    
    $
    628
    
    
    $
    427
 Interest Income  Investments 
  Interest Income  Loans and Leases
   41




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##### Table of Contents



Interest Expense  Deposits and Borrowings 
     Provision for Loan and Lease Losses
  Allowance for Loan and Lease Losses.
 Noninterest Income
  Noninterest Expense
  Note 9  Contingent Liabilities
   42




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##### Table of Contents



Income Tax Expense
  Note 9  Contingent Liabilities
 Liquidity and Capital Resources
 Liquidity
    Capital Resources
    43




---



##### Table of Contents



Minimum Required
    
    
    Minimum RequiredFor Capital
    
    
    To Be ConsideredActual
    
    
    Adequacy Purposes
    
    

Well-CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in thousands)At March 31, 2011:Bancorp Rhode Island, Inc.Tier I capital (to average assets)
    
    $
    129,448
    
    
    
    8.14
    %
    
    $
    63,592
    
    
    
    4.00
    %
    
    $
    79,490
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    129,448
    
    
    
    11.46
    %
    
    
    45,197
    
    
    
    4.00
    %
    
    
    67,795
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    143,620
    
    
    
    12.71
    %
    
    
    90,394
    
    
    
    8.00
    %
    
    
    112,992
    
    
    
    10.00
    %Bank Rhode IslandTier I capital (to average assets)
    
    $
    127,659
    
    
    
    8.03
    %
    
    $
    63,578
    
    
    
    4.00
    %
    
    $
    79,472
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    127,659
    
    
    
    11.30
    %
    
    
    45,173
    
    
    
    4.00
    %
    
    
    67,759
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    141,831
    
    
    
    12.56
    %
    
    
    90,345
    
    
    
    8.00
    %
    
    
    112,932
    
    
    
    10.00
    %At December 31, 2010:Bancorp Rhode Island, Inc.Tier I capital (to average assets)
    
    $
    127,711
    
    
    
    8.10
    %
    
    $
    63,035
    
    
    
    4.00
    %
    
    $
    78,794
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    127,711
    
    
    
    11.27
    %
    
    
    45,316
    
    
    
    4.00
    %
    
    
    67,975
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    141,925
    
    
    
    12.53
    %
    
    
    90,633
    
    
    
    8.00
    %
    
    
    113,291
    
    
    
    10.00
    %Bank Rhode IslandTier I capital (to average assets)
    
    $
    126,031
    
    
    
    8.00
    %
    
    $
    63,047
    
    
    
    4.00
    %
    
    $
    78,809
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    126,031
    
    
    
    11.13
    %
    
    
    45,292
    
    
    
    4.00
    %
    
    
    67,938
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    140,245
    
    
    
    12.39
    %
    
    
    90,584
    
    
    
    8.00
    %
    
    
    113,231
    
    
    
    10.00
    %
 Recent Accounting Pronouncements
 Note 4  Recently Issued Accounting Pronouncements
  44




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
     Estimated Exposureto Net Interest IncomeDollar
    
    
    PercentChange
    
    
    Change(Dollars in thousands)Initial Twelve Month Period:Up 300 bps
    
    $
    (3,066
    )
    
    
    -5.53
    %
  Asset and Liability
Management
  45




---



##### Table of Contents



ITEM 4. Controls and Procedures
    46




---



##### Table of Contents



PART II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  The Merger Agreement May Be Terminated in Accordance with Its Terms and the Merger May Not
Be Completed
   Termination of the Merger Agreement Could Negatively Impact the Company
  
    
    the Companys business may have been adversely impacted by the failure to pursue
other beneficial opportunities due to the focus of management on the merger,
without realizing any of the anticipated benefits of completing the merger; and
 
    
    the market price of the Companys common stock might decline to the extent that
the current market price reflects a market assumption that the merger will be
completed.
   47




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##### Table of Contents



The Company Will Be Subject to Business Uncertainties and Contractual Restrictions While
the Merger is Pending
  The Merger Agreement Limits the Companys Ability to Pursue Alternatives to the Merger.
  Following Completion of the Merger, Brookline Bancorp Will Face Risks Different from Those
Faced by Brookline Bancorp Today, which May Affect the Market Price of the Shares of
Brookline Bancorp Common Stock
   48




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number
    
    
    Maximumof Shares
    
    
    Number ofPurchased as
    
    
    Shares ThatTotal Number
    
    
    Average
    
    
    Part of
    
    
    May yet Beof Shares
    
    
    Price Paid
    
    
    Announced
    
    
    PurchasedPeriod
    
    Purchased (a)
    
    
    per Share
    
    
    Plan
    
    
    Under the Plan1/1/11 through 1/31/11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2/1/11 through 2/28/11
    
    
    12,100
    
    
    $
    30.56
    
    
    
    
    
    
    
    3/1/11 through 3/31/11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (a)
    
    In February 2011, the Companys Chief Executive Officer delivered 12,100 shares of
the Companys common stock to satisfy the exercise price for 25,200 stock options
exercised. The shares delivered were valued at $30.56 per share. The Chief Executive
Officer paid the balance of the exercise price and all taxes in cash. 
 Item 3. Defaults Upon Senior Securities
  
 Item 5. Other Information
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##### Table of Contents



Item 6. Exhibits
 10.6
    (c)
    
    Amendment No. 3 to Amended and Restated Supplemental Executive Retirement Plan31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
200232.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
 
  50




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
   Bancorp Rhode Island, Inc.May 4, 2011
    
    
    
    /s/ Merrill W. Sherman(Date)
    
    
    
    Merrill W. ShermanPresident andChief Executive OfficerMay 4, 2011
    
    
    
    /s/ Linda H. Simmons(Date)
    
    
    
    Linda H. SimmonsChief Financial Officerand Treasurer
  51